loan draws figured?
A good draw
schedule balances the contractor’s need to get paid for work done and materials
purchased, with the homeowners’ and their bank’s desire not to pay too far ahead
of what has been completed. On a new custom home, payments are usually matched
to the completion of a particular phase: foundation, frame, drywall, and so on.
On a remodel/renovation,
payments often depend on the percentage that has been completed. It’s important
that the homeowner communicate with their contractor to ensure there are no
misunderstandings about how and when funds will be disbursed.
This is particularly
important because contractors rarely do all the work themselves, they hire
sub-contractors (electricians, plumbers, drywallers) to fulfill a lot of the work.
These sub-contractors are independent businesses and require monies to be paid
so that they are able to pay their employee’s and continue working. They don’t
have the ability to carry a lot of debt and thus require a prompt payment once their
work has been completed and they have submitted a bill for it.
If you don’t have
a well designed draw schedule then you could end up holding up your own job as
sub-contractors will not return to finish or start other work without being
paid for what is already owed to them.